New Delhi: Authorities in the United Arab Emirates are reportedly planning to relax tax residency rules for expatriates who have left amid the conflict in the Middle East to allow them to spend more time abroad without losing their status as tax residents.
According to a report by Financial Times, those who have fled since the beginning of the conflict are likely to be shown “greater leniency” on rules that require them to be present in the UAE for a minimum number of days per year to qualify as tax residents.
Current rules say an individual qualifies as a tax resident of the UAE, if they have been in the country for at least 183 days in the past 12 months. An individual may also qualify if they have stayed 90 days in the country in the 12-month period, besides fulfilling one of the following conditions—a UAE or GCC passport or a valid UAE residence visa; owned or rented home in the UAE that is available to them all year; or employment with a UAE-based company or a business in the country.
“Dubai has already seen its safety and security selling point damaged by recent events. It is really important for its economy and image to retain these expats,” the FT report quotes Elsa Littlewood, tax partner at BDO, as saying.
However, UAE’s Federal Tax Authority is reluctant to issue blanket exemptions. It has advised, instead, to address applications on a case-by-case basis once the conflict ends, two lawyers briefed by the authority tell FT. The authority may also consider force majeure, a provision invoked during extraordinary and unforeseeable events, when determining residency.
The Federal Tax Authority is working on rule relaxations with the Federal Authority for Identity, Citizenship, Customs and Port Authority, FT further reports.
UAE’s test for residency begins 1 January. So unless the rules are actually relaxed, people who left after the war began on 28 February are at risk of losing their tax status if they do not return in coming months.
The number of resident Indian Nationals in UAE is estimated to be 4.3 million, about 35 percent of the country’s population, as of 2024. Among the Indian community itself, 35 percent are said to be professionally qualified personnel, businessmen & other white collar non-professionals and their families.
India’s Ministry of External Affairs said earlier this month that more than 52,000 Indian nationals were brought back from the Gulf region to India between 1 March and 7 March.
(Edited by Mannat Chugh)
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